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The collapse of the global end-demand in the fourth quarter of 2008 resulted in the quick contraction of industrial production and weak international trade.

Latest data show a number of positive points, such as a 1-per-cent month-on-month growth in retail sales in the United States and Britain in January.

January retail sales in China, where growth is still more than 10 per cent annually in real terms, were also stronger than previously expected, even after removing the Chinese New Year's effect, while recent corporate earnings announced in India remained consistent with expectations.

Secondly, auto sales in China and India have shown signs of recovery as the Chinese government, for instance, is expected to come up with more favourable policies for the automotive sector to stimulate domestic sales in the coming months.

Some of the measures include a reduction in interest rates for auto loans, which are currently 10 to 40 per cent higher than the benchmark rate, and a cut in the value-added tax for second-hand cars.

China's next boom in the auto industry is forecast to kick off in 2010 or 2011, when the so-called tier-three Chinese cities' average household disposable income rises to a level comparable to those of tier-one cities in 2003 and tier-two cities in 2006.

Both of those fuelled China's previous two booms in auto sales.

Other positive points include a trade surplus in South Korea of US$3.3 billion (Bt118.67 billion) in February, versus a $3.4-billion deficit in January; and property transaction volumes in China, India, Hong Kong and Singapore that were higher than previously expected.

The bank's research unit says the intensity of the global business sector adjustment has also led to negative feedback for household fundamentals as income and equity prices in developed economies are taking a hit.

Another consequence is a drop in export demand.

This is also underlined by feedback that there is little faith in the market for emerging-market growth when the economies of the Group of Three, namely the US, the European Union and Japan, remain in deep recession.

In addition, there are doubts about the better-than-expected consumption data in China. Yet the medium-term outlook should remain positive, as it is driven by the belief that aggressive monetary and fiscal action will result in emerging-market Asian economies being the first to come out of this recession.

Based on this view, China and India, both of which have the most pro-growth policies, are showing the earliest recovery in demand.

A popular question, however, remains "Will emerging-market consumer demand offset the developed consumer recession?"

The answer is a resounding "no", though policy-makers in emerging markets are trying to stimulate domestic consumption and investment to offset severe external weaknesses.

Therefore, investors should continue with their position to take advantage of these policies rather than worry about the overall rate of GDP growth, the bank's study suggests.

As for Thailand, the fiscal stimulus of 1 per cent of GDP starting next month is expected to lead to a consolidation of domestic demand in the second quarter, while policy interest rate drops to 1 per cent by June.

Domestic auto sales and consumer confidence index would measure urban and rural consumption. A recovery of vehicle sales, particularly pickup trucks, would signal an improvement of activity in the farm sector.

Higher consumer confidence could suggest increasing propensity for urban consumers to draw down savings.

With regard to politics, the no-confidence motion and parliamentary debate is due shortly, but the move shouldn't deal the government a severe blow.